Back to Europe Rankings

FINLAND: An Introduction to Energy & Natural Resources

Contributors:
HPP Attorneys Ltd Logo
View firm profile

FINLAND: INTRODUCTION TO ENERGY AND NATURAL RESOURCES

Journey towards renewable energy and climate-friendly solutions continues

The goal set by the Finnish Government as stated in the 2019 Government Programme is that Finland will become carbon neutral by 2035 and carbon negative shortly after that. Furthermore, Finland aims to become the first fossil-free welfare state in the world by replacing the fossil fuel-based production of electricity and heat with fossil-free options by the year 2030, which means that the transition towards renewable energy production has been accelerated in recent years. As a result of the ambitious targets set by the Finnish Government, the political atmosphere is in general aiming towards more environmental and climate-friendly solutions in every political and industrial sector. This is reflected also by the reform of the Finnish Mining Act that is currently under preparation. 

Wind power – No more subsidies and continued rise of PPAs 

Statistics by Finnish Energy show that wind power production, once again, set a new record for annual production during 2020 at 7.8 TWh. The capacity of wind power production increased by 13% and production by 29%. In 2019, the share of wind power, for the first time, settled permanently above fossil fuels. In 2020, the trend continued, as the share of wind power was 11.8% of the total electricity production. Carbon-neutral energy sources in general kept setting records in 2020. The share of renewable energy sources was 51% and the share of carbon-neutral energy sources was 85% of the total electricity production. The carbon emissions resulting from electricity production decreased by 24% in 2020.

The vast majority of renewables projects are still onshore or nearshore wind projects, and, especially in 2020, there was a strong level of activity with new projects being planned, often with larger planned capacity due to increased turbine sizes. After the closure of the Feed-in Tariff subsidy scheme there are currently no plans for any replacement subsidy scheme and new wind power projects will need to be developed and operated on market terms, which has driven growth of the market for long-term private Power Purchase Agreements (PPAs). With the increased production possible from ever larger and more efficient turbines and the cost of technology falling, the pace of development is proving that the market believes that good returns are still achievable from Finnish wind farms. With the increased awareness of climate change and Finland being home to a large number of industrial companies and a growing number of data centres with high electricity consumption, the flow of new PPAs is expected to continue. If large off-takers continue to enter into PPAs, the PPA market is likely to eventually attract also smaller off-takers who have the need for energy and desire to be viewed as climate-friendly.

Mining sector – Continued development 

Finland has a strong mineral cluster which, in addition to mining of minerals, also has a high capacity for concentration and further processing. Finland has good minerals potential, e.g. for battery minerals (cobalt, lithium, nickel, graphite) as well as other minerals such as copper and gold, which makes it an interesting region for exploration and mining. This is supported by the stable political and economic situation, good infrastructure, the availability of detailed and extensive geological data produced by the Geological Survey of Finland and leading knowledge in the area of mining technology. Finland is a strong producer of high-quality mining technology by companies such as Metso Outotec, Normet, Sandvik and Robit. The Finnish Government, through its special purpose company Finnish Minerals Group, is supporting the development of the Finnish battery cluster, including the mining of battery minerals, production of battery chemicals and also further production in the battery value chain (such as precursors and cathode active materials).

According to the latest report on the mining industry published by the Ministry of Employment and the Economy in March 2020, in 2019 the total excavation reported by 24 companies was 115.1 million tonnes of which total excavation of ore was 44.9 million tonnes. In total, 28.9 million tonnes of metal ore were extracted in Finland’s 11 metallic mineral mines (e.g. gold, chrome, copper, nickel, zinc, cobalt and silver), 3.3 million tonnes of carbonate rocks in 13 mines (e.g. calcite and dolomite), 12.3 million tonnes of industrial mineral ores in 13 industrial mineral mines and 0.1 million tonnes of industrial rocks in seven mines. Total mining investments in mines increased by 42%, being EUR525 million for 2019. The biggest investment targets were Boliden/Kevitsa, AgnicoEagle/Kittilä, Outokumpu/Kemi, Yara/Siilinjärvi and SotkamoSilver. Total exploration investments dropped by 11% in 2019, but interest in Finland as an object for exploration seems to be continuing as the amount of reservation applications increased by 76% and the amount of exploration permit applications remained at the same level as in the previous year.

Electrification, digitalisation and circular economy, together with sustainability, also influence investments made at the mines. This can be seen e.g. as investments in the decrease of CO2 emissions from heat production through recovery of excess energy and new heating solutions, as well as replacing fossil fuels as the source of power. The replacement of dumper trucks using diesel with electrified dumper trucks is one example which will result in significant savings in the use of fossil fuel (compared e.g. to savings in the use of fuel that can be gained by electrification of passenger cars). Digitalisation in turn enables increased intelligence in machines and processes which, in turn, as a result of data moving faster and more efficiently, results in improved safety and efficiency and even decreased emissions. In addition to mining of minerals, this development appears in the entire mineral cluster from exploration (e.g. use of drones in airborne surveys) to production of end products (e.g. fossil-free steel production).

Reform of Mining Act 

The Finnish Mining Act is being reformed. The purpose of the reform as highlighted in the Government Programme is to improve the level of environmental protection and ensure the operating conditions of mines, while also improving local acceptability and influencing opportunities (e.g. municipalities and landowners). The aim is to take the environmental impacts of planned mines into account at the earliest stage possible and to explore the permit processes, practices and possible need for restrictions concerning mineral exploration rights in nature conservation areas. The Government Programme also sets a target to develop the regulation on securities so that environmental responsibilities are dealt with in all situations and to develop the ability to take into account the uranium content of ore when assessing the environmental impacts of mines. According to the Government Programme there is also a plan to explore the possibility to set a mining tax for the mining industry and to investigate the possibility of taxing profits from the sale of mining rights in Finland even when mining rights are owned by non-Finnish resident entities.

The reform of the Mining Act is being prepared by the Ministry of Employment and the Economy, which has also set up a working group to support the preparation work. The Government proposal for the reform of the Mining Act was initially planned to be issued to the Finnish Parliament in December 2020, but due to additional surveys proposed in connection with the reform (such as possible taking into use of interest comparison in connection with granting of mining permits under the Mining Act) the period for preparation of the Government proposal was extended until 31 December 2021.